INSTRUCTOR DISCUSSION NOTES: Dollar Falls, Travelers Feel the Pain

1. Discuss how changing exchange rates affect prices in the trading countries.

Using the example in the article, the dollar is falling against the euro. This means that American travelers in Europe, wanting to buy euros, will have to pay more American dollars for each euro they buy. As the dollar falls further, that means the coke they bought yesterday will cost them more today in terms of dollars. On the other hand, a European traveler to the U.S. would be facing cheaper cokes as the dollar falls. The falling dollar also means American exports will now be relatively cheaper to European buyers.

2. Visit http://www.xe.com/ucc and convert dollars to euros at the current exchange rate. Do you think this would be a good time to visit Europe?

This site will allow students to quickly compute the exchange rate for any two countries. You may want to extend this question to other countries and let the students compute the various exchange rates for themselves. Another idea is to give them several countries and let them determine which would be the greatest travel bargain at the time.

### Multiple Choice/True False Questions

1. As the dollar falls against the euro, prices for American travelers in Germany fall.
1. True
2. False
Ans. B

2. Using Mr. Kingsley’s example, for every euro he bought he had to pay about \$1.43.
1. True
2. False
Ans. A